The differences between the central bank and commercial bank is that the former ______
Answer Details
The main difference between central banks and commercial banks is that central banks serve as the "lender of last resort" while commercial banks do not.
Central banks are the primary monetary authority in a country and are responsible for managing the money supply, maintaining financial stability, and regulating banks and other financial institutions. One of the key roles of a central bank is to act as a lender of last resort, which means they provide loans to commercial banks and other financial institutions that are experiencing financial difficulties and cannot obtain loans from other sources.
On the other hand, commercial banks are financial institutions that accept deposits from the public and provide loans and other financial services to individuals, businesses, and governments. While commercial banks can also lend money to other banks, they do not have the ability to act as a lender of last resort.
Discounting treasury bills is one of the tools that central banks can use to manage the money supply and control inflation, but it is not the main difference between central banks and commercial banks. Similarly, while commercial banks do provide loans to the public, this is not the main difference between them and central banks. Finally, while banks do help individuals save their money, this is not a distinguishing feature of central banks, which focus more on regulating the overall financial system rather than individual savings accounts.